$3.8B on Mobile Ads This Year Can't Keep Up With Usage

Though mobile advertising is growing fast, it’s not yet keeping up with the growth of mobile usage. Imran Khan of J.P. Morgan estimated today that $3.8 billion will be spent on the U.S. mobile web in 2010, up from $2.6 billion in 2009, but a whole lot less than the $25 billion in total U.S. online advertising for the year.

Khan thinks mobile will follow a similar pattern as the web, where usage outpaced revenue until an inflection point at 30 percent broadband penetration. But the problem is, mobile Internet is growing even faster than desktop Internet, as the Morgan Stanley analyst Mary Meeker has detailed. Today 60 million Americans are actively using mobile Internet service.

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The J.P. Morgan report (PDF) comes on the eve of Apple’s (s AAPL) release of iAd, the mobile app advertising platform that was formidable enough on spec alone for the FTC to drop its antitrust investigation of Google (s GOOG) buying AdMob. iAd is set to ship with the new iPhone OS 4.

For now, the vast majority of mobile advertising — $3.2 billion, or 85 percent — comes from SMS, which has the advantage of being accessible on nearly every phone. However, while mobile subscriber growth is growing, smartphone growth is zooming — Nielsen said today U.S. smartphone penetration is now at 23 percent.

Khan projects mobile display advertising to grow rapidly, up to $253 million in 2010, though he projected traditional Internet display ad providers should soon start to edge out mobile specialists like Third Screen Media and AdMob, since web pages viewed in good mobile browsers don’t require custom ads.

Lastly, J.P. Morgan identified mobile search advertising, including both search results pages and voice lookups, as another high growth area, hitting $321 million in 2010. While display CPMs should go down over time as inventory increases, the firm thinks search CPCs will grow.

Of course, Steve Jobs is betting on a different scenario for the future for both display and search; Apple’s iAd a solution explicitly targets native mobile apps, with each ad being essentially a rich HTML 5 app-within-an-app. Jobs has contended that mobile experiences are much more oriented to apps than search.